Abbey National posts £984 million loss

Abbey National has posted a pre-tax loss of £984 million, its first loss since it became a bank.

The bank, Britain's second largest mortgage lender, also slashed its dividend to shareholders, to just 25p down from 50p last time.

Luqman Arnold, who took over the reins in October, said: "On behalf of the whole board, I would like to express our regret at the results and dividend cut that we have announced today."

Abbey, which described the loss as "extremely unsatisfactory" said that it will radically reorganise its business following an intensive strategic review which began in November.

It will focus the bank solely on providing personal financial services in the UK, while all businesses outside this remit would be axed.

"This is a radical shift in strategy. It will allow us to channel our energies into our core markets where we have demonstrable strengths and where we have the greatest opportunity to succeed and distinguish ourselves."

The group is to slash costs by £200 million in its personal financial services businesses as well as seeking "extensive cost savings" in the businesses to be sold off or run down.

A spokesman said there could be some job cuts but could not give a number.

The company's turnaround plans come after a tumultuous year sparked by the corporate division's exposure to high-risk loans, particularly in the US.

That led to the departure of chief executive Ian Harley in the summer and attracted a failed £10 billion merger approach from the Bank of Ireland.

The group said staff reductions were most likely to come from back office and infrastructure roles, while customer facing and service areas were parts it wanted to build up.

Mr Arnold said: "The net effect is likely to be a reduction in jobs, we do not have a number."